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> The shale oil in the ground is a perfectly good stockpile as is. I think the point people are trying to make is that it's quite a bit less expensive to buy c
by nordsieck 7y ago
> The shale oil in the ground is a perfectly good stockpile as is.
I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
- BurningFrog 7y agoSure, but you have to weigh in the probability that such a strategic stockpile will ever be used. As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
- kube-system 7y agoThat probability is 100% because it has already been used. Multiple times. https://www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/releasing-oil-spr?mod=article_inline https://www.energy.gov/fe/services/petroleum-reserves/strate...
- valuearb 7y agoThey aren’t making that argument, they are making the ludicrous argument that moving a fraction of 1% of our oil supplies from one hole to another at taxpayer expense somehow protects us from something. Even if they were it’s not the purpose of government to gamble public money on market timing bets. Oil has a history of always getting cheaper. Plenty of private funds are going to be spent in the energy market in these bets.
- markdown 7y agoYou're forgetting the opportunity cost. $3B spent on buying something you don't really need but that might save you some cash in the future, versus $3B saving lives today.
- brianwawok 7y agoDoes opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency.
- nordsieck 7y ago> Does opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency. Just because the US can transmute solvency risk into inflation risk doesn't mean that the cost goes away.
- brianwawok 7y agoSure, but you measure it very different compared to a man standing around with $100 in his pocket. It's more like a man with a money press in his pocket.
- renewiltord 7y agoWell, we have a bunch of call options at $40 (50% of American shale is viable there, probably more if labour costs drop). Given that, the downside is capped so that reduces the need to stockpile, and hyper-optimize this stuff.
- quickthrowman 7y agoAre these 40Cs for the Apr contract expiration?
- renewiltord 7y agoSorry, I was being metaphorical. Shale becomes viable at $40 so the US has practically unlimited oil if prices hit $40. There's no need to hedge against. America has a natural resources hedge.
- quickthrowman 7y agoGotcha! Similar to the ol “Fed Put” :)